Buffett makes Swiss Re investment

US investment guru Warren Buffett is to inject three billion Swiss francs (£1.8bn; $2.6bn) into the world's second largest reinsurer Swiss Re.

Mr Buffett already owns 3% of Swiss Re, which he bought a year ago.

The news came as the Swiss company warned investors they should expect a net loss of one billion francs for 2008 as funds have been hit by writedowns.

Swiss Re also said that it may consider raising a further two billion francs on the capital markets.

Mr Buffet has made a series of investments as the economic downturn has continued to bite.

Last week motorcycle firm Harley-Davidson secured $300m from the 78-year-old Berkshire Hathaway chief.

"Disappointed"

Towards the end of last year Mr Buffet bought $5bn of shares in US investment bank Goldman Sachs, which needed additional funds to improve its finances.

Swiss Re has had a difficult time recently and reported a surprise third-quarter loss of 304m Swiss francs in November. Analysts had been expecting a profit.

"We are disappointed with our overall results in 2008, but our core business is performing well," said Swiss Re chief Jaques Aigrain.

The company has made losses on contracts sold to protect clients against drops in fixed-income securities.

So far this year, its stock has declined some 40%.

Chairman arrested in Japan 'scam'

Japanese police have arrested the chairman of a Tokyo bedding supplier over an alleged investment scam reportedly worth $1.4bn (£970m).

Kazutsugi Nami, chairman of the now bankrupt L&G, had offered investors 36% annual returns and issued special electronic money termed "Enten".

The 75-year-old businessman had built a cult status among those who invested in his company.

He is reported to have swindled 37,000 investors, but denies any wrongdoing.

Police have confirmed his arrest but not the size of the alleged fraud.

Mr Nami and other L&G executives allegedly collected huge investment funds from clients despite knowing they could not pay the promised investment returns.

He also collected funds by issuing ''Enten'', saying that the quasi-currency could be used at company-sponsored bazaars nationwide and internet markets, according to an investigation reported by Kyodo news agency.

'Enten' fair

Mr Nami has denied any wrongdoing, AFP news agency reports.

"I'm leading 50,000 people. Can they charge a company this big with fraud?" he asked reporters.

Questioned over whether he was sorry for his investors, he was quoted as replying: "No! I have put my life at stake." He was then led away by the police.

Kazutsugi Nami had built up a cult-like following among customers.

Mr Nami wooed his so-called "shareholders", saying he had a "divine decree" to "eliminate poverty from this world", according to lawyers representing victims.

"Enten" was fed into investors' mobile telephones and used to buy items ranging from vegetables to futons, clothes and jewellery.

The name "Enten" is apparently a combination of the Japanese words for the yen currency and paradise.

The NTV network aired footage of an "Enten fair" where participants sang the praises of the investment plan.

L&G was established in 1987, at first selling bedding and health products.

It began its investment scheme, including the issuance of "Enten", in 2001.

The company stopped paying cash dividends in February 2007, and by September of that year had sacked most of its employees, Kyodo reported.

It folded in November 2007 and is now undergoing a court-led bankruptcy process.

US Senate eases 'trade war' bill

The US Senate has voted to soften a controversial "Buy American" clause in an economic recovery package, after warnings it might spark a trade war.

The clause had sought to ensure only US iron, steel and manufactured goods were used in projects funded by the bill.

But senators approved an amendment requiring that provisions in the bill comply with international trade agreements with Canada and the EU.

Earlier President Barack Obama said the US should avoid seeming protectionist.

The BBC's Jonathan Beale in Washington says the climb-down by the US Senate follows warnings from the EU and Canada that the stimulus bill could spark a trade war.

The White House has said it supports giving preference to domestic manufacturers in public works programmes - but only if it does not violate existing trade agreements, our correspondent says.

There will be a sigh of relief from many people at the Senate's move, he adds, but it remains to be seen whether the House of Representatives will back the watered-down version of the bill.

Retaliatory moves

US senators voted overwhelmingly, late on Wednesday, to require the "Buy American" provisions "be applied in a manner consistent with US obligations under international agreements".

However, an amendment put forward by Republican Senator John McCain which would have removed the clause altogether was defeated.

Speaking before a vote on that amendment, Mr McCain warned that if the provisions were passed it would "only be a matter of time before we face an array of similar protectionism from other countries - from 'Buy European' to 'Buy Japanese' and more".

European and Canadian ambassadors to Washington had already warned that the clause could provoke protectionism and trigger retaliatory moves.

The EU had said the clause in the $800bn (£567bn) US economic recovery package would send "the worst possible signal".

A European Commission spokesman said the EU would launch a complaint with the World Trade Organization (WTO) if the clause remained.

Canada's ambassador to the US, Michael Wilson, had also urged the US Congress to drop the provision.

Japan announces Asia aid package

Japan's PM Taro Aso has announced a 1.5 trillion yen ($17bn;£11.6bn) aid package to help Asian countries weather the economic downturn.

The money will be spent over three years on infrastructure projects and promoting trade.

It is hoped the proposed funding, which will be finalised at a summit later this year, will boost regional growth.

Mr Aso called on wealthy nations to help smaller countries and warned against protectionism.

Asia's banks have weathered the financial crisis better than their European and US counterparts.

But the region's export-dependent economies have been hit as the global downturn saps demand for consumer goods.

"Japan is ready to provide ODA (overseas development assistance) of not less than 1.5 trillion yen or about $17bn in total," Mr Aso told the World Economic Forum in Davos.

"It will be necessary to strengthen regional cooperation towards strengthening Asia's growth potential and expanding domestic demand," Mr Aso said.

Mr Aso also said that Japan's development assistance would be on the precondition "that the flow of trade and investment not be prohibited".

"We will resolutely fight all protectionism," he said.

Glaxo 'to cut thousands of jobs'

Drugs giant GlaxoSmithKline is set to announce thousands of job cuts as it faces increasing competition from generic drug makers, reports suggest.

More than 6,000 jobs are set to go according to reports in the Observer, The Sunday Times and The Telegraph.

A spokesman for the company could not confirm or deny the reports, saying simply that Glaxo "was in the middle of a restructuring programme".

Some of the cuts will be made from the UK workforce, the reports say.

The company employs around 100,000 people across the world, including 18,000 in the UK.

The company is suffering from increased competition from cheaper, generic drugs as patent protection runs out on a number of its household drugs.

'Restructuring'

The "restructuring programme", designed to cut costs and boost profits, was announced in October 2007.

At the end of 2008, Glaxo announced around 800 job cuts in the UK.

This included 200 at its factory in County Durham, and more than 600 as a result of the closure of its factory in Kent in 2013.

The company has manufacturing operations across the UK, including sites at Ware, Maidenhead and Worthing.

Last week, rival AstraZeneca said it would cut an additional 6,000 jobs on top of thousands of cuts already announced.

Glaxo reports its annual results on Thursday of next week.

Job cuts

These job cuts would be the latest in a long line of recently announced lay-offs as UK companies struggle in the recession.

On Saturday, a CBI survey showed that small and medium-sized manufacturers in the UK are laying off workers at a faster rate than at any time since the early 1990s.

In total, 38% of UK firms surveyed cut jobs during the final quarter of 2008.

The latest unemployment figures show that there were 1.92 million people unemployed in the UK between September and November last year, the highest level since September 1997.

Chinese migrant job losses mount

In China, an estimated 20 million workers from rural areas who had been working in cities have lost their jobs, according to a senior official.

A survey carried out in 15 provinces suggests about 15% of the total migrant labour pool is now unemployed.

There are fears that if large numbers of workers cannot find jobs, that could lead to social unrest.

The Chinese government researchers visited 165 villages across the country to try to build an accurate picture.

They were looking at how the economic malaise here is spreading.

The data they collected suggests the number of migrant workers now unemployed is 20 million - far higher than had been announced previously.

With last week's Spring Festival now over, millions of workers who had spent the week at home with their families were due to return to the cities.

But many have no jobs to come back to.

Unhappy unemployed

The government has said the economic downturn in China first started to be felt in the provinces where many exporters were based in the east and south of the country.

But now the effects are being felt further west as migrant workers see their wages cut or lose their jobs and are forced to return home.

A new document setting out rural policy for the year ahead warns that "shocks to agricultural and rural development are constantly emerging".

This year it will be hard to improve the incomes and the lives of farmers it says.

The fear of course is that large numbers of unhappy unemployed workers in rural areas could cause trouble.

The government says maintaining stable and fast economic development is the main task for the year ahead, according to reports.

Officials have been told to do what they can to "nip problems in the bud" - to try to resolve them before they can provoke protests.

Davos finds no answers to crisis

The World Economic Forum has ended with a call to rebuild the global economic system.

Founder Klaus Schwab announced a "global redesign initiative" to reform banking, regulation and corporate governance.

For five days, more than 2,000 business and political leaders discussed what some here called the "crisis of capitalism".

However, most discussions described the problems, not solutions.

The forum's official theme this year had been "shaping the post-crisis world", but that turned out to be premature.

Rather, the debates proved the widespread uncertainty amongst both politicians and corporate bosses, as they tried to gauge the depth of the economic crisis and explore ways how to get out of it.

Nobody in Davos tried to refute the prediction that the global economy is heading into a deep and long recession.

One top money market manager said: "If you believe that the world economy will turn the corner at the end of this year, or in [the first quarter] of 2010, I tell you we have not turned the corner, we can't see the corner, we don't even know where the corner is."

Another participant summed up the state of the discussion as "we don't know what to do, only that we need to do something and we need to do it fast".

With the old certainties of the free market gone, even free marketeers accepted the need for more regulation, quick.

Professor Schwab said the current situation was a perfect example of where banks could take the lead and devise a system of self-regulation, and not wait for governments to regulate it.

It may be too late for that, though, with politicians from Germany's Chancellor Angela Merkel to UK Prime Minister Gordon Brown calling for a global regulator to ensure a smoother running of the international financial system.

RBI Reference rate for US dollar and euro

The Reserve Bank of India on Wednesday fixed the Reference rate for the US currency at Rs 48.87 per dollar and the single European unit at Rs 64.76 per euro from Rs 48.85 per dollar and Rs 64.51 per euro respectively on Friday.

In a press note issued in Mumbai by the apex bank, the exchange rates of Great Britain's Pound and Japanese Yen against the Rupee have been given as Rs 69.7204 per pound and Rs 54.82 per 100 yen respectively, based on the Reference rate for US dollar and middle rates of the cross currency quotes at noon.


The Reference rate is based on 12 noon rates of a few select banks in Mumbai and the SDR-Rupee rate will be based on this rate, the release added

Yahoo makes a loss as sales slip

Yahoo has reported a loss in the final three months of 2008 as the economic downturn hit sales of online ads.

Its figures showed a loss of $303.4m (£215m) compared with a profit of $205.7m a year earlier.

But analysts said the company had weathered the downturn better than expected, with the loss mainly due to one-off costs.

The results come as Carol Bartz takes over from Jerry Yang as the firm's new chief executive.

Mr Yang stepped down following his rejection of a $47.5bn takeover offer from Microsoft last year, which rankled the company's shareholders.

"The company made important investments while aggressively managing costs, leaving us better positioned to weather the economic downturn and emerge stronger when advertiser spending improves," said Ms Bartz.

Profits shrink at Sumitomo Mitsui

Japan's third largest bank, Sumitomo Mitsui, has seen third quarter net profit fall 99% to 154m yen ($1.7m; £1.19m) from 148.9bn yen a year before.

Japan's major banks have been hit hard by rising costs of bad loans and heavy losses on their stock portfolios.

The group also said net profit for the April to December period fell 74% amid the worsening global economic turmoil.

Japan's banks have stakes in their corporate clients, making them sensitive to equity market swings.

"The major problem for Japanese banks is their large equity holdings," said Kristine Li, a bank analyst at KBC Securities in Tokyo.

"If the Nikkei falls from here, the impairment losses in the fourth quarter, which is more important than the third quarter, could be even bigger.

"That could force many banks to revise down their full-year and some banks to raise new capital."

However, the Nikkei index edged 0.56% higher on Wednesday, helped by news of an expansion of a US stimulus plan and adding to the 4.9% jump recorded on Tuesday.

For the full financial year, Sumitomo Mitsui is predicting net profit of 180bn yen on revenue of 3.7 trillion yen.

The results come a day after Japanese broker Nomura reported heavy losses for the final three months of 2008, as it struggles to integrate parts of failed US bank Lehman Brothers.

Nomura made a net loss of 342.9bn yen ($3.8bn; £2.7bn), compared with a profit of 21.8bn yen a year ago.

Davos starts in very gloomy mood

A gloomy economic outlook dominates discussions as global political leaders and business people gather for the annual World Economic Forum in Davos.

Economists are warning that global recession and trade protectionism will be dire for developing countries.

A poll of business leaders suggests any recovery could take three years.

Chinese Premier Wen Jiabao and Russian PM Vladimir Putin are to speak on the first day of the summit, which is themed "shaping the post-crisis world".

Klaus Schwab, the founder of the World Economic Forum, has warned the crisis is nowhere near over yet.